Tag: currency

Her high-stakes parliamentary vote on her Brexit plans is due later on Tuesday and the outcomes vary wildly from soaring success to complete political collapse. Currency traders lie in wait, hoping not to be caught on the wrong side of a sterling trade that could whip wildly in either direction as the debate rages and the votes roll in. It could be a late night in the City of London and thin trade from other regions of the world could exasperate matters. The consensus expects defeat for May and

Her high-stakes parliamentary vote on her Brexit plans is due later on Tuesday and the outcomes vary wildly from soaring success to complete political collapse.

Currency traders lie in wait, hoping not to be caught on the wrong side of a sterling trade that could whip wildly in either direction as the debate rages and the votes roll in. It could be a late night in the City of London and thin trade from other regions of the world could exasperate matters.

“Sterling liquidity in Asia is limited and as such there is a risk that even if a no vote is assumed that does not preclude sterling selling off, impacted by headline risk,” Jeremy Stretch, the head of G-10 foreign exchange strategy at CIBC Capital Markets, told CNBC via email.

The consensus expects defeat for May and her Brexit proposals but what’s crucial is by how much. She needs the backing of 320 lawmakers, more than half of the 639 that vote in Parliament.

Paul Ciana, the firm’s chief global technical strategist, highlighted the dollar versus the Chinese yuan on CNBC’s “”Futures Now” to show the strength of “risk on” (or high-yielding, risk-sensitive) assets. His big takeaway: The broader market rally has room to run because the dollar/yuan currency pair is in a downtrend. “We have a technical top in the U.S. dollar versus the Chinese yuan. The dollar versus the yuan has been trading at its weakest level since July. “We have a nice left shoulder,

His big takeaway: The broader market rally has room to run because the dollar/yuan currency pair is in a downtrend.

“We have a technical top in the U.S. dollar versus the Chinese yuan. Now, that’s a very important technical top to have because it means the dollar is weakening,” he said Thursday. “The lower that the exchange rate between the U.S. dollar and the Chinese Yuan comes down, the more it is a sign, per say, that the trade agreements between the U.S. and China are going well.”

The dollar versus the yuan has been trading at its weakest level since July.

“We have a nice left shoulder, head and right shoulder that formed. That neckline was broken just the other day right in here. We’re now legging down not to one, but to a second new low,” said Ciana.

Fed Chairman Jerome Powell reiterated on Thursday the U.S. central bank has the ability to be patient on monetary policy given that inflation remains stable. Fed Vice Chair Richard Clarida also struck a dovish tone, underscoring the central bank’s willingness to remain patient on the issue of raising rates. “The Fed Funds Rate is no longer accommodative but neutral, and more importantly, positive in real terms. In line with a more patient Fed, the U.S. dollar’ rise will become gentler,” said Phi

The dollar fell versus its major peers on Friday, as investors grew increasingly confident that the U.S. Federal Reserve may hit the pause button on monetary tightening this year.

Fed Chairman Jerome Powell reiterated on Thursday the U.S. central bank has the ability to be patient on monetary policy given that inflation remains stable. Markets are now pricing in no further rate hikes by the Fed this year.

“The market has almost priced in that the Fed will not be hiking rates any further. To get the dollar weaker, market now has to expect a rate cut…I don’t see that happening,” said Sim Moh Siong, currency strategist at Bank of Singapore.

Sentiment was still slightly cautious in Asian trade on a lack of concrete details from the United States and China on any progress in their trade dispute after a three-day meeting in Beijing. The two sides are more than halfway through a 90-day truce agreed by U.S. President Donald Trump and his Chinese counterpart Xi Jinping.

Traders still remain optimistic that a trade deal between the world’s largest economies will eventually materialize. U.S. Treasury Secretary Steven Mnuchin said late on Thursday that Chinese Vice Premier Liu He will “most likely” visit Washington later in January for trade talks.

Bank of Singapore’s Sim added that currencies such as the Australian dollar, a gauge of risk appetite, and the New Zealand dollar, are likely to see further gains if a U.S.-Sino trade deal is reached.

The Aussie dollar was last at $0.7201, gaining 0.2 percent versus the greenback, while the kiwi firmed 0.44 percent to $0.6808.

The dollar also fell 0.47 percent versus the offshore yuan to 6.7602. The yuan is now at its strongest since late July last year.

The dollar index fell by 0.17 percent to 95.37. The index has fallen around 2.2 percent since mid-December on expectations that a slowdown in growth, both in the United States as well as globally, will restrict the Fed from raising rates in 2019.

In 2018, the greenback outperformed its peers, gaining 4.3 percent as the Fed hiked rates four times on the back of a strong domestic economy, falling unemployment and rising wage pressures. This has caused traders to turn bearish on the dollar.

However, few analysts still forecast a rising dollar for this year.

“The Fed Funds Rate is no longer accommodative but neutral, and more importantly, positive in real terms. In line with a more patient Fed, the U.S. dollar’ rise will become gentler,” said Philip Wee, currency strategist at DBS in a note.

The euro gained 0.2 percent to $1.1519, after losing 0.4 percent of its value in the previous session. The single currency has been pressured by a slew of weaker-than-expected economic data, especially from France and Germany.

The European Central Bank is widely expected to remain accommodative in 2019, which should keep a lid on the single currency.

Elsewhere, sterling traded marginally firmer, fetching $1.2752 in early Asian trade with traders focused on the progress of Brexit.

British Prime Minister Theresa May must win a vote in parliament to get her Brexit deal approved or risk seeing Britain’s exit from the European Union descend into chaos. The vote is now due to take place on Jan. 15. The numbers are not in May’s favor and her chances of winning the vote look extremely slim.

The dollar weakened versus the Canadian dollar by 0.17 percent to C$1.3211. The greenback has lost 3.25 percent against the loonie over the last six sessions, with the commodity-linked currency bolstered by a rebound in oil prices.

Powell’s colleague Raphael Bostic, the Atlanta Fed President, added to the central bank’s dovish tone on Monday. “The Fed is listening to the market and has acknowledged flashing market signs,” said Sim Moh Siong, currency strategist at Bank of Singapore. “U.S. inflation has been well behaved so far and so the Fed does have room to pause on its rate hike cycle,” added Sim. The dollar had gained 4.3 percent in 2018 as the Fed hiked rates four times on the back of a strong domestic economy, fallin

The dollar struggled for traction against its peers on Tuesday, with investors increasingly convinced the Federal Reserve will not raise interest rates this year amid risks of a sharper slowdown in global growth.

The greenback was marginally firmer against the yen, after falling 0.2 percent earlier in the session as traders wagered that the monetary tightening cycle in the world’s largest economy has been halted for the year.

On Friday, Fed Chairman Jerome Powell told the American Economic Association the Fed is not on a preset path of rate hikes and it will be sensitive to the downside risks markets are pricing in.

Powell’s colleague Raphael Bostic, the Atlanta Fed President, added to the central bank’s dovish tone on Monday. Bostic, who is not a voting member of the Federal Open Market Committee this year, said the Fed may only need to raise rates once in 2019.

“The Fed is listening to the market and has acknowledged flashing market signs,” said Sim Moh Siong, currency strategist at Bank of Singapore.

“U.S. inflation has been well behaved so far and so the Fed does have room to pause on its rate hike cycle,” added Sim.

The dollar index was marginally higher, fetching 95.80 at 0244 GMT. Earlier in the session, it had hit an intra-day low of 95.68.

The index has lost around 2 percent since mid-December, and has followed a decline in U.S. bond yields as market participants have grown increasingly confident that the Fed will not hike rates in 2019.

The dollar had gained 4.3 percent in 2018 as the Fed hiked rates four times on the back of a strong domestic economy, falling unemployment and rising wage pressures.

But market expectations for further Fed tightening this year have shifted markedly in the last few months, with some traders now expecting even a rate cut this year.

Financial markets have been rattled by heightened worries about slowing global growth, especially in the United States and China, though data on Friday showed strong U.S. job growth.

Expectations of no further rate hikes this year are likely to keep the greenback under pressure.

The euro was down 0.2 percent at $1.1448, after touching an intra-day high of $1.1485. The single currency has gained around 1.3 percent over the last three trading sessions as the outlook towards the greenback weakened.

The euro’s recent strength has surprised some analysts as growth and inflation remain weak in the eurozone, well below European Central Bank forecasts.

“Having consolidated in a 200-pip range for a large part of the past 2 months, the pair is prime for a breakout,” said Kathy Lien, managing director of currency strategy at BKX Asset Management in a note.

The British pound changed hands at $1.2787, relatively unchanged from its previous close. Traders expect sterling to remain volatile over the next few weeks due to Brexit woes.

Britain’s Prime Minister Theresa May must win a vote in parliament to get her Brexit deal approved or risk seeing Britain’s exit from the European Union descend into chaos. The vote is now due to take place the week beginning Jan. 14.

May’s chances of winning the vote look slim as the DUP, the small Northern Irish party that usually props up her government, is opposed to the deal.

Elsewhere, the Australian dollar was lower by 0.15 percent at $0.7136. Despite its weakness on Tuesday, traders remain positive on the Aussie dollar over the short term.

Sentiment has been buoyed by aggressive stimulus measures in China, Australia’s largest importer of commodities, and also improved prospects for a U.S.-China trade deal.

U.S. Commerce Secretary Wilbur Ross predicted on Monday that Beijing and Washington could reach a trade deal that “we could live with”.

The United States imposed sanctions on Tuesday that target a Venezuelan currency exchange network scheme that siphoned billions of dollars to corrupt insiders of the Venezuelan government, the U.S. Treasury Department said. It said the seven individuals targeted by the move include a former Venezuelan treasurer, Claudia Patricia Diaz Guillen, and Raul Antonio Gorrin Belisario, who bribed the Venezuelan Treasury in order to conduct illegal foreign exchange operations. “Venezuelan regime insiders

The United States imposed sanctions on Tuesday that target a Venezuelan currency exchange network scheme that siphoned billions of dollars to corrupt insiders of the Venezuelan government, the U.S. Treasury Department said.

It said the seven individuals targeted by the move include a former Venezuelan treasurer, Claudia Patricia Diaz Guillen, and Raul Antonio Gorrin Belisario, who bribed the Venezuelan Treasury in order to conduct illegal foreign exchange operations.

“Venezuelan regime insiders have plundered billions of dollars from Venezuela while the Venezuelan people suffer. Treasury is targeting this currency exchange network which was another illicit scheme that the Venezuelan regime had long used to steal from its people, Secretary of the Treasury Steven Mnuchin said in a statement.

The U.S. Treasury said the former Venezuelan officials and other individuals used favorable foreign exchange transactions through brokerage firms controlled by Gorrin and among a few that were approved by the South American country’s treasury. The individuals concealed their profits in U.S. and European bank accounts and investments, it said.

The U.S. Treasury statement cited 23 groups as being part of the scheme, including Globovision Tele in Caracas and Miami, Magus Holdings in Miami, Tindaya Properties in New York, Planet 2 Reaching Inc and Posh 8 Dynamic Inc, both of Delaware.

Sterling slipped on Wednesday, partially reversing some of the gains notched up earlier this week, as strong factory surveys failed to dispel the growing concerns over Brexit negotiations. Lawmakers are set to discuss the agreement again next month, with a vote in the week starting Jan. 14. That is keeping currency traders on edge with implied volatility gauges, a measure of short-term currency fluctuations in sterling elevated. Against the euro, the British currency fell 0.1 percent to 90 pence

Sterling slipped on Wednesday, partially reversing some of the gains notched up earlier this week, as strong factory surveys failed to dispel the growing concerns over Brexit negotiations.

British factories ramped up their stockpiling in December as they prepared for possible border delays when Britain leaves the European Union in less than three months’ time, a survey showed.

“Despite this increase in demand, confidence remains weak as everyone knows that these increased supplies of raw materials, constituent parts and finished goods will eventually run out and supply chain disruption will hurt businesses later down the line,” said Jeremy Thomson-Cook, chief economist at WorldFirst.

Prime Minister Theresa May is struggling to overcome deep opposition to her Brexit plan in her own Conservative Party, raising the risk that no transition period will be provided to ease Britain out of its four-decade-long membership of the EU.

May pulled a vote on her divorce deal last month after admitting that parliament would reject it. Lawmakers are set to discuss the agreement again next month, with a vote in the week starting Jan. 14.

That is keeping currency traders on edge with implied volatility gauges, a measure of short-term currency fluctuations in sterling elevated.

At 1410 GMT, the pound fell more than a percent to $1.2610 against the dollar. It rallied more than a percent in intraday trading on Monday.

Against the euro, the British currency fell 0.1 percent to 90 pence.

In the futures markets, traders stepped up their bearish bets against the British currency, taking net short bets to a two-month high at $4.8 billion.

Calling it his “best trade,” one currency strategist said investors should buy the Australian dollar now. “The Australian currency is very undervalued at these levels,” Patrick Bennett, foreign exchange strategist at the Canadian Imperial Bank of Commerce, told CNBC on Thursday. Bennett predicted the Australian dollar will be trading at 77 or 78 cents to the U.S. dollar by the second half of 2019. But the strategist advised investors to buy the AUD against the euro instead of the greenback for n

Calling it his “best trade,” one currency strategist said investors should buy the Australian dollar now.

“The Australian currency is very undervalued at these levels,” Patrick Bennett, foreign exchange strategist at the Canadian Imperial Bank of Commerce, told CNBC on Thursday.

He said he expects the U.S. and China to come to a resolution on their trade tensions, which would leave the Australian dollar “very well positioned,” he told CNBC’s Squawk Box. The currency Down Under is often seen as a gauge of global risk appetite. In some cases, it is also viewed as a proxy for China, especially since the Chinese yuan doesn’t trade freely.

Bennett predicted the Australian dollar will be trading at 77 or 78 cents to the U.S. dollar by the second half of 2019. The currency was trading at about 70 American cents as of Friday morning in Asia.

But the strategist advised investors to buy the AUD against the euro instead of the greenback for now. It is a “bit early” to buy it against the U.S. dollar, he said. That is, Bennett explained, because the American economy continues to outperform its peers, and he sees the dollar starting to decline only in the second or third quarter of 2019.

Beyond the dollar Down Under, Bennett also recommended currency investors buy the Korean won because it is one of the few economies in the Asian region that has recently seen a strong inflow into domestic assets, especially bonds.

He expects the Korean won to trade as low as 1,080 to the dollar by the third quarter of 2019. As of Friday morning, the currency traded at about 1,119.

“It’s only because of its association with other Asian and trade-related economies that it has somewhat under-performed,” he said of the won. He also noted that it has surpluses in its trade account, current account and fiscal account.

A Japanese official said on Tuesday that volatility was rising in the currency market and the government stands ready to take necessary steps if the market becomes too erratic. “Volatility is rising. “We will keep close watch on market moves with a sense of urgency, while thoroughly checking to see if there’s any speculative move,” he said. Asakawa’s comments underscored Japan’s concerns about the return of a strong yen. Asakawa said financial markets seem to have “overreacted” to some weak econ

A Japanese official said on Tuesday that volatility was rising in the currency market and the government stands ready to take necessary steps if the market becomes too erratic.

“Volatility is rising. Each country shares the G-7/G-20 view that excess volatility and disorderly moves are undesirable for the economy,” Masatsugu Asakawa, vice finance minister for international affairs, told reporters.

“We will keep close watch on market moves with a sense of urgency, while thoroughly checking to see if there’s any speculative move,” he said.

Speaking after a meeting with his counterparts from the Bank of Japan and Financial Services Agency to discuss market developments, Asakawa said the government would take action as appropriate if volatility increases.

He did not elaborate what action would be called for.

Asakawa’s comments underscored Japan’s concerns about the return of a strong yen. Authorities tend to be sensitive about signs of the yen gaining strength as a strong currency would undermine the country’s export-led economic recovery.

The dollar fell to a four-month low of 110 against the safe-haven yen on Tuesday as the Nikkei index dropped more than 5 percent to a 20-month low after a slide on Wall Street deepened amid U.S. political turmoil.

Asakawa said financial markets seem to have “overreacted” to some weak economic indicators and U.S. political moves over fiscal and monetary policies.

Economic fundamentals in Japan and the United States remained firm and they were in a gradual recovery trend, he added.

The government must ensure swift passage of budget bills in parliament next year to support the economy, while the central bank will continue with strong monetary easing to achieve its 2 percent inflation target, he said.

“Countries actually need tax revenue in order to fund services for their residents.” In addition to taxes, Galit says the U.S.’s Federal Reserve System‍ is a hurdle. If the Fed raises the interest rate, borrowing money becomes more expensive in the U.S. economy, thereby putting a damper on growth. If, on the other hand, the Fed lowers interest rates, borrowing money becomes cheaper, thereby accelerating the economy. “Part of that is actually managing currency in the interest rates [for lending]

“Now you could have a debate whether taxes are fair or unfair or whatever but they are a reality. There are going to be taxes because governments need revenues,” Galit says. “Countries actually need tax revenue in order to fund services for their residents.”

But at least when it comes to state government, some attitudes may be shifting. Ohio has become the first state in the country to allow certain tax bills to be paid with bitcoin, but payments still need to go through the website OhioCrypto.com, which converts bitcoin into cold hard cash, which the government then receives, highlighting Galit’s point. Arizona, Georgia and Illinois have bills in the works that would allow bitcoin to be used to pay tax bills in a similar way, according to the Wall Street Journal.

In addition to taxes, Galit says the U.S.’s Federal Reserve System‍ is a hurdle.

The Fed exists to “[promote] the stability of the financial system,” and “to minimize and contain systemic risks through active monitoring and engagement in the U.S. and abroad,” among other tasks, according to its website. Its most powerful lever on the U.S. economy is its federal fund interest rate, or the rate at which it lends money to banks. If the Fed raises the interest rate, borrowing money becomes more expensive in the U.S. economy, thereby putting a damper on growth. If, on the other hand, the Fed lowers interest rates, borrowing money becomes cheaper, thereby accelerating the economy.

If a nation’s central bank does not have the ability to control the currency for the people in its own nation state, then it is largely rendered impotent. And most countries have their own central banks too.

“Central bankers are there to actually help manage the economies and provide kind of stewardship for those economies,” Galit says. “Part of that is actually managing currency in the interest rates [for lending] and in exchange rates. If you don’t actually have any control over a currency you’ve lost one of the major policy tools that you have, so what do you do?”

Facebook is reportedly working on a cryptocurrency for global payments. Instead, the tech giant reportedly plans to use a “stablecoin,” a digital currency pegged to the U.S. dollar. The company’s hiring of former PayPal President David Marcus sparked rumors that Facebook would eventually dive into financial services. Marcus moved to Facebook to run its messenger app in 2014, and now runs the company’s secretive blockchain initiative. Facebook is one of many tech and financial services giants at

Facebook is reportedly working on a cryptocurrency for global payments.

The social media giant plans to use a digital currency to focus on small payments in India, Bloomberg reported citing people familiar with the matter.

But it’s not using bitcoin. Instead, the tech giant reportedly plans to use a “stablecoin,” a digital currency pegged to the U.S. dollar. Cryptocurrencies have been marked by volatility this year, often seesawing 10 or 15 percent in a single day. Stablecoins however mirror the price of a government-backed currency and could solve the issue of volatility.

Facebook did not immediately respond to CNBC’s request for comment.

The company’s hiring of former PayPal President David Marcus sparked rumors that Facebook would eventually dive into financial services. Marcus moved to Facebook to run its messenger app in 2014, and now runs the company’s secretive blockchain initiative.

Facebook is one of many tech and financial services giants at least exploring blockchain, the technology underlying bitcoin and other cryptocurrencies. Amazon, J.P. Morgan, Walmart and IBM are among other well-known companies testing the technology. Its potential has been compared to the internet but so has its hype.

Still, few established U.S. companies have embraced cryptocurrencies themselves. CEOs from Jamie Dimon to Warren Buffett have bashed bitcoin and warned investors of the speculative bubble as it ushered in retail buyers last year. The world’s largest cryptocurrency is down more than 70 percent in 2018 alone, according to data from CoinDesk.

Facebook-owned WhatsApp has gained traction in India, where remittance payments are big business. According to the World Bank, people sent $69 billion from other countries into India last year.